The petrochemical industry faces a severe crisis as Yeochun NCC struggles to secure funds to keep operating. This sector, one of the largest ethylene producers worldwide, is now dealing with prolonged losses and intense competition from China. The market downturn has been relentless, and recovery remains uncertain for most companies involved.
Yeochun NCC, a joint venture between Hanwha Solutions and DL Chemical, recently shut down its third plant due to financial strain. The company needs over 300 billion won to avoid default. Hanwha Solutions committed 150 billion won in loans, while DL Chemical plans to raise 200 billion won through a rights offering. Both firms hope this will buy time to stabilize operations.
Earlier this year, both partners injected 100 billion won each into the company to maintain cash flow. Despite these efforts, the petrochemical crisis continues to weigh heavily on operations. Chinese oversupply has further intensified pressure, leaving Korean producers struggling to stay competitive. Without structural changes, losses are expected to persist.
The petrochemical crisis extends beyond Yeochun NCC, affecting other major players. LG Chem shut down its styrene monomer lines in Yeosu and Seosan due to weak demand. Lotte Chemical also stopped production at ethylene-related units in Yeosu, further signaling a deepening industry downturn. These closures underline the urgency for sector-wide solutions.
Industry analysts warn that within three years, half of the sector’s companies could face survival risks. If one or two large firms collapse in an industrial complex, smaller partners may follow. Such a domino effect could devastate regional economies dependent on petrochemical jobs. The warning highlights the fragility of the current market.
To cope with financial strain, companies are liquidating non-core assets. LG Chem sold its water solutions division and is preparing to sell its aesthetics business. Lotte Chemical secured significant cash by selling overseas subsidiary shares. These moves create breathing room but do not solve deeper structural challenges.
Industry leaders are urging the government to provide immediate relief measures. They are calling for lower electricity prices to ease operational costs. They also seek increased R&D funding to develop high-value-added products and reduce reliance on commodity petrochemicals. Without such support, the petrochemical crisis may escalate further.
Reports predict that China will dominate new global petrochemical capacity for years to come. This expansion will likely worsen oversupply and suppress prices in key markets. Experts caution that without restructuring and strong policy support, profitability will remain elusive for many firms. The coming years will test the sector’s resilience.
Government officials are preparing a package of financial and tax incentives to help the industry. Plans aim to strengthen operations, protect regional economies, and prevent mass layoffs. The announcement is expected soon, giving companies hope for a lifeline amid the ongoing petrochemical crisis.
